Security Bank earnings sliced to P3.1 billion

MANILA, Philippines — Security Bank Corp. slashed its profit to P3.1 billion in the first half from P5.7 billion in the same period last year amid the sharp decline in interest and non-interest earnings.

The drop in interest and non-interest earnings translated to a 45.6 percent plunge in the bank’s profit from January to June this year, erasing the gains from the sharp decline in provision for potential loan losses amid the ongoing pandemic.

In a disclosure to the Philippine Stock Exchange, Security Bank reported a 14 percent decline in net interest income to P13.6 billion in the first half compared to last year’s level.

Likewise, non-interest income plunged by 52 percent to P4.8 billion amid the decline in extraordinary securities trading gains. Earnings from service charges, fees and commissions jumped by 28 percent to P2.1 billion.

Security Bank’s operating expenses inched up by 0.9 percent from January to June, driven by investments in technology and manpower to improve customer experience.

The bank said provision for credit losses plunged by 78 percent to P2.4 billion in the first half from P11 billion in the same period last year as the country recovers from the impact of the pandemic.

This translated to a lower non-performing loan (NPL) coverage ratio of 103 percent from 174 percent despite the sharp rise in NPL ratio to 3.93 percent from 1.58 percent.

The bank’s loan book contracted by four percent to P438 billion as retail loans dropped by 12 percent and wholesale loans declined by one percent.

On the other hand, its deposit base inched up by two percent to P522 billion, translating to an asset base of P704 billion as of end-June.

For the second quarter alone, Security Bank’s net income fell by 46.4 percent to P1.5 billion from P2.8 billion amid the 11.5 percent decline in net interest income to P6.9 billion as well as 46.9 percent plunge in non-interest income to P4.3 billion.

From April to June, the bank said it set aside P2 billion for potential loan losses arising from uncertainties caused by the resurgence of COVID-19 cases, 62.3 percent lower than the P5.3 billion allocation made in the same quarter last year.

However, Security Bank president and chief executive officer Sanjiv Vohra noted an improvement in the quarter-on-quarter performance of the bank since the fourth quarter of last year.

“Our second quarter results reflect continued quarter-on-quarter improvement from the fourth quarter of 2020 despite the challenging pandemic backdrop. Our team is grateful for the recognition of the bank’s unrelenting commitment on delivering BetterBanking to address our clients’ needs.” Vohra said.